London private rental sector turning continental

12th Jan 2014

Homeownership is still a key aspiration of many people in the UK but London is becoming a lot more like the Continent. London and some other parts of the UK are beginning to follow the European model – with long term rental becoming more common. Although in Europe it’s considered a lifestyle choice for the UK it seems to be out of necessity.

Many of our generation of renters are tied into the rental market due to the cost of buying property. Some of the leading estate agency firms have seen private rentals creep up steadily, with some firms reporting 25% more lettings now than in 2009.

Private renting in London as a whole takes up 25% off all available homes which equates to the same amount let by social landlords. The Government has already suggested that this figure is set to rise, by up to another 15%, within the next decade.

The demand for rental properties in London has seen the cost of renting increase. As with almost all sectors of the market supply simply doesn’t meet the demand and rents in London have, just like the number of people choosing to rent, increased by nearly a quarter since 2009.

The London rental market is mainly populated by buy to let landlords and this has been the case for the past two decades. It has meant that a large number of new build apartments have been available to renters and have proved extremely popular. Yields in the buy to let sector are generally good but the private rental sector in London is undergoing some significant change at present.

More serious, institutional investors have started to take an interest in the rental sector. The Olympic Park area in Stratford has become one of the first examples of an institutionally backed private rental scheme. Known as East Village, the area offers 2,800 high quality properties, with 50% off them already designated affordable homes.

The Government’s recently launched Build to Rent fund has offered £6.5bn of loan guarantees to help encourage a larger quantity of quality homes available for long-term rental. There is hope the scheme will encourage a more attractive private rental system, therefore giving people the option to rent because they want to, like the larger part of Europe, rather than because

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